After witnessing a 15.8% quarter-on-quarter (QoQ) jump in the previous quarter owing to the reopening of offices and educational institutes, in Q2 of 2022, the total rental housing demand (searches) across all cities performed even better with a total increase of 29.4% QoQ and 84.4% year-on-year (YoY). The search volumes in Bengaluru, Greater Noida, Hyderabad, and Pune witnessed the highest growth of 54.5%, 42.9%, 42.0%, and 39.6% QoQ, respectively, reveals Magicbricks’ India Rental Housing Update.
The cumulative supply (listings) witnessed a growth of 3.0% QoQ and 28.1% YoY across the 13 Indian cities mapped. Chennai, Bengaluru, and Hyderabad witnessed the maximum growth of 17.4%, 15.1%, and 9.4%, respectively.
Compared to the previous quarter, the supply of rental units witnessed a low hike due to a couple of reasons. Firstly, the increased demand has resulted in higher leasing leading to fewer vacant and available rental homes. Secondly, most of the under-construction properties units are being bought by end-users and not investors. Hence, the supply of new units that can be offered for renting is reducing.
Commenting on the report, Sudhir Pai, CEO, Magicbricks, said, “With schools and offices reopening, the workforce and students are moving back from their native cities to the metros, leading to an increase in demand for rental homes. The supply of rental homes is growing slowly compared to last quarter with available vacant homes decreasing and units not being replaced quickly by new supply as most of them are being bought by end-users and not investors. However, we expect the growth momentum to continue for the next few quarters.”
The report concludes that demand for rental housing has increased near schools with the reopening of educational institutions, and employment hubs as employees return to their workplace for at least two to three days a week.
Macro trends spotted from Magicbricks’ India Rental Housing Update Q2, 2022
* In Q2 2022, the aggregate demand (searches) across the 13 cities increased 29.4% QoQ and 84.4% YoY. Bengaluru, Greater Noida, Hyderabad, and Pune registered a growth of 54.5%, 42.9%, 42.0%, and 39.6% QoQ, respectively.
* The cumulative supply (listings) increased 3.0% QoQ and 28.1% YoY, with Chennai, Bengaluru, and Hyderabad observing maximum growth of 17.4%, 15.1%, and 9.4%, respectively.
* The pan India rents increased 8.4% QoQ with Hyderabad, Bengaluru, Noida and Pune witnessing maximum growth of 14.3%, 13.5%, 10.7%, and 9.5% QoQ.
Market-specific takeaways from Magicbricks’ Rental Housing Update Q2, 2022:
* In Delhi, the aggregate demand for residential markets witnessed a 21.5% QoQ growth, while supply increased by 5.5% QoQ and average rents increased by 8.8% QoQ. The demand increase can be majorly attributed to the excellent metro connectivity to major employment hubs, social and retail infrastructure, and availability of affordable rental properties.
* Demand in Mumbai’s residential market increased 12.8% QoQ due to the seamless connectivity in central and western peripheral localities while supply declined by 8.2% QoQ; average rents increased 8.4% QoQ.
* Bengaluru’s residential demand observed the highest growth with an increase of 54.5% QoQ, while the supply observed a growth of 15.1% QoQ. There was a continued preference for 2BHKs, constituting 48% of the total demand and 55% of the total supply.
* Chennai’s residential market was driven by demand for spacious units. The demand grew 8.6% QoQ while the supply grew 17.4% QoQ due to the addition of new inventory in the affordable areas in the city. The average rents also increased 4.4% QoQ; 2 BHK configurations accounted for 52% of the total demand.
* Greater Noida’s residential market witnessed an upsurge in demand due to the reopening of educational institutions and offices. The demand grew 42.9% QoQ while the supply declined by 4.3% QoQ with an increase of 5.8% QoQ in the average rents. Homebuyers in the city have a strong preference for affordable housing, with 50% of the demand share for 2BHKs.
* Hyderabad’s residential demand grew 42% QoQ while the supply increased to 9.4% QoQ. Average rents also witnessed a QoQ increase of 14.3% as a result of the swift reverse migration to cities for work-related opportunities. The residential market was dominated by 3BHK (45%) and 2BHK (40%).
* Pune’s residential market demand increased to 39.6% QoQ while supply remained stable; average rents increased 9.5% QoQ. The 2BHK units continue to hold a majority share in the market with a demand of 50%, indicating a preference for affordable properties.